SEC Acknowledges Grayscale’s XRP ETF Filing Sparking Hope for Crypto Funds

• The SEC’s acknowledgment of Grayscale’s XRP ETF shows an open stance on crypto funds, adding hopes for broader adoption.
• A 240-day review process begins, but approval isn’t guaranteed as the SEC may reject, modify, or delay Grayscale’s XRP ETF proposal.
• Approval could drive institutional adoption, yet regulatory uncertainty remains a challenge for future crypto ETF applications.

Grayscale’s 19b-4 application to turn its XRP Trust into an exchange-traded fund (ETF) has been approved by the U.S. Securities and Exchange Commission (SEC), according to a report by Eleanor Terrett on X. Although acknowledgment does not ensure approval, it signifies a shift in the SEC’s approach toward digital asset funds. Unlike in past instances, the commission is engaging with applications instead of dismissing them outright.

What This Means for Crypto ETFs

The acknowledgment of Grayscale’s XRP ETF application signals a more open-minded SEC. After regulators declined to intervene, exchanges withdrew their applications for Solana (SOL) ETFs in December. Along with other pending ETF petitions for Litecoin (LTC), Dogecoin (DOGE), and Solana, the SEC seems open to considering XRP this time.

Besides, this step gives investors hope that more crypto-based financial products could enter the market. Consequently, institutional adoption of digital assets may increase. Additionally, it could set a precedent for future crypto ETF applications.

The Approval Timeline and Next Steps

Once the acknowledgment gets published in the Federal Register, a 240-day approval window begins. The SEC will then review the application, request public comments, and make its decision. However, several challenges remain. The SEC could still reject the proposal, impose modifications, or prolong the decision-making process.

Moreover, other firms, including Bitwise , 21Shares, Canary Funds, and WisdomTree, have also filed for XRP ETFs. The SEC is expected to acknowledge these applications soon. Hence, their approval chances will depend on how the regulatory landscape evolves.

The Significance of SEC Engagement

The SEC’s willingness to negotiate entry into Grayscale’s application represents a gradual flip from its stance on crypto ETFs. If approved, it can potentially provide doorways to further institutional investor utilization of XRP and other cryptocurrencies. It would also provide investors with regulated exposure to cryptocurrencies without acquiring direct ownership.

However, regulatory uncertainty remains a key challenge. The SEC’s past reluctance to approve spot crypto ETFs indicates that a smooth approval process is not guaranteed. Consequently, market participants must remain cautious while awaiting further developments.